PowerGen directors' options yield pounds 5m

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Directors of PowerGen made a profit of pounds 5.2m last year by exercising share options - far more than had been believed previously. The gains included cash of about pounds 3.5m, with the rest held in the form of shares.

The figures were revealed in PowerGen's annual report, which also shows that Ed Wallis, chief executive, had a 15 per cent increase in pay last year to pounds 461,000. Mr Wallis accounted for pounds 1.2m of the share option gains.

Gordon Brown, shadow Chancellor, said that PowerGen had responded to public anger over boardroom excess with "contempt". He added: "Their response to criticism has been to make things worse, piling excess onto excess."

Sir Colin Southgate, chairman, said: "I can assure all shareholders that pay is independently set and reflects the market rate."

He said that all bonus incentives were related directly to performance and that there was full disclosure. Sir Colin's own pay is stated in the accounts as pounds 150,000 compared with pounds 86,000 in 1993/4 when he joined half- way through the year.

On Tuesday, it emerged that directors of rival generator National Power made pounds 1.6m on share options last year and had a 17 per cent increase in their total pay. Labour attacked those increases as flying in the face of "public outcry and anger".

PowerGen said that the basic pay of four directors, including Mr Wallis, would be frozen this year. It could not comment on bonuses, which depend on performance. Mr Wallis's bonus last year accounted for pounds 105,000 of his overall pay.

The company also defended a new medium-term bonus scheme under which Mr Wallis and three other directors were awarded more than 55,000 shares to be held in trust for at least three years. At yesterday's price, these are worth about pounds 280,000.

A PowerGen spokesman said that the performance criteria were extremely tough. He also pointed out that Mr Wallis was now on a two-year rolling contract compared with the previous three years.

PowerGen has been stung by repeated accusations over boardroom greed and believes it has been unfairly singled out for criticism.

The company is already suing the Observer for defamation over a report related to share option gains.

Norweb, the regional electricity company for the north- west of England, reported yesterday that said its executives' pay rose between 2 and 3 per cent last year, the same as for other staff. Directors' contracts have been cut from three years rolling to two.

Norweb announced pre-tax profits up 15 per cent to pounds 205m in the year to March and raised dividends 23 per cent to 28.4p after a final of 20.2p.